Month: August 2021

What is Currency Trading in India?

A currency future, often known as an FX future, is a futures contract that allows you to exchange one currency for another at a fixed price (exchange rate) on the purchase date. The price of a futures contract is expressed in INR per unit of another currency, such as US Dollars. Currency future contracts allow investors to protect themselves against the risk of currency depreciation. The US Dollar (USD), Euro (EUR), Great Britain Pound (GBP), and Japanese Yen (JPY) are the four currency pairs on which currency derivatives are available.

In the Currency Derivatives sector, cross-currency futures and options contracts on the EUR-USD, GBP-USD, and USD-JPY are also accessible for trading.

The National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and the Metropolitan Stock Exchange of India Ltd all offer forex trading.

Currency futures are available for all of the following currency and cross-currency pairs, however, Currency Options are only available for USDINR, EURINR, GBPINR, and JPYINR.

USD to INR

The acronym for the US Dollar versus the Indian Rupee is USD/INR. This Asian currency pair is classified as a developing market currency. The base currency is the US Dollar, and the quote currency is the Indian Rupee.

The market price defines the value of the Indian Rupee in relation to the US Dollar. 1 USD = X INR is the exchange rate. So, if the market price of USDINR is 71.46, it will cost about Rs 71 to buy $1.

The US Dollar is the world’s most widely convertible currency and is frequently used as a benchmark in the Forex market. It is held by practically every central bank in the world as the leading global reserve currency. Furthermore, because the dollar is the standard currency in the commodities market, it has a direct impact on commodity pricing.

1 US Dollar to Indian Rupee stats

EUR to INR

Euro member countries use the Euro as their currency. The EUR to USD rate is the most popular Euro conversion rate, according to our currency rankings. Euros have the currency code EUR and the currency sign €.

The market price defines the value of the Indian Rupee in relation to the Euro. 1 Euro = X INR is the exchange rate. So, if the market price of EURINR is 88, it will cost about Rs88 to buy €1.

Many Euro-zone regions, departments, and sovereign entities, such as the Azores, Balearic Islands, and Canary Islands, use the Euro. In Cuba, North Korea, and Syria, the Euro is utilized as a trading currency, and several currencies are pegged to it.

1 Euro to Indian Rupee stats

GBP to INR

GBP is the currency code for British Pounds. £ is the currency symbol. The British Pound is the world’s oldest currency and one of the most widely convertible currencies. The GBP is tied to the Falkland Islands, Gibraltar, and Saint Helena. The Bank of England is the United Kingdom’s central bank. The British Pound is the world’s third most held reserve currency, while it is the fourth most traded currency. The British Pound is also known as the Pound Sterling, Sterling, Quid, Cable, and Nicker.

The market price defines the value of the Indian Rupee in relation to the Euro. 1 GBP = X INR is the exchange rate. So, if the market price of GBPINR is 103, it will cost about Rs103 to buy £1.

1 British Pound to Indian Rupee stats

JPY to INR

JPY is the currency code for the Japanese Yen. The sign for the currency is ¥. The Japanese yen is the world’s third most traded currency, and Asia’s most extensively traded currency. The Japanese Yen is frequently used in carrying trades with the Australian Dollar and the US Dollar due to its low interest rates. A carry trade is a strategy that involves trading a low-interest-rate currency for a higher-interest-rate currency.

1 Japanese Yen to Indian Rupee stats

Late this week, gold on the MCX, gold (FUTCOM – expires on 5th October) dropped by Rs. 952, pushing the price at the local jewellers down by a similar amount. Depending on the city you were in, gold prices on Saturday were down Rs 850 to Rs 1,000, per 22 karats for 10 grams. On Sunday, gold prices at the local jeweller is unlikely to change, as trading does not take place in the global or local markets.

Will gold prices fall further next week?

Let’s understand the fact that India does not mine gold. We are dependent on gold imports. So, if gold prices in the international markets go higher, they go up in India too and when they fall they fall in India too. Late this week, gold prices dropped by 2.5% in the global markets, pushing prices in India by a similar margin.

Why did the price of gold drop?

The already falling prices of gold faced another strike by the recent data – published by the US’s Labor Department. The report stated the present employment rates and how wages performed in the country. Overall the data gave a positive tone. Unemployment rate sunk to 5.4% from 5.9% in June. The average hourly earnings gain has been 0.4% and work-week has been steady. Non-farm payrolls have also increased by 943,000 in July. It certainly gives an indication that the USA’s economy is gaining its pace again. Personal income of people is up-scaling and productions going up too – as more people are getting engaged into jobs.

When the economy is gaining is momentum back, it is expected the USA’s Federal Reserve might increase interest rates. Earlier the Fed declared they are not thinking to increase the rates any time soon. But the jobs data released on Friday might change the decision. As interest rates go up, government bond yields will go higher and the US dollar will gain strength. People will be more interested to invest in government bonds, so, major commodities will lose their value. Hence we are witnessing a selling pressure in gold. Apart from this, a major problem is that the US Fed may announce a gradual tapering of its bond buying programme. This may lead to a further fall in gold prices, as liquidity is being withdrawn from the system.
Markets will be keeping a watch on the Jackson Hole Economic Symposium, which is likely by end of August. The Fed Chair Jerome Powell at the platform may indicate a timeline to start outlining the central bank’s tapering plans. If there is some kind of indication, gold prices could fall in the international markets, pulling gold prices in India lower as well.

In the global markets, gold closed at $1762 an ounce, dropping 2.5%, post the employment numbers in the US. It is likely that we might see some more downtick later this week. If this were to happen, prices in India would drop automatically. All in all, US inflation numbers, US job numbers and the Jackon Hole meeting in the month of August would be key to gold movement in the international markets and hence in the Indian markets.